The practice of adjusting the market value of securities that are accounted for using the
fair value method is referred to as
a. consolidation.
b. marking-to-market.
c. passive investing.
d. segregation of investments.
Storage facility used for storing inventory goods
Match the most probable matching method to the costs listed. (Choices may be used
more than once.)
a. Directly match a specific revenue
b. Indirectly match with the period during which it will provide revenue
c. Not recognized in this period
Gross profit percentage
Indicate the type of each ratio listed. (Choices may be used more than once.)
a. Liquidity ratio
b. Debt management ratio
c. Asset efficiency ratio
d. Profitability ratio
e. Stockholder ratio
Trattoria, Inc. engaged in the following investment transactions during 2013:
At December 31, 2013, the market value of Tarbet’s stock was $54. A) Prepare journal
entries to record this investment assuming management intends to hold this investment
for less than a month.
B) Calculate the market value of the company’s investment at December 31, 2013.
C) Prepare the necessary journal entry at December 31, 2013.
D) How should this investment be disclosed in the December 31, 2013 financial
statements?
Bihary Company has a beginning balance in its inventory account of $2,250 and the
ending balance is $1,500. Cost of goods sold is $9,750. According to the cost of goods
sold model, what was the amount of inventory purchased during the year?
a. $ 750
b. $ 9,000
c. $10,500
d. $11,250
Refer to Dreammaker Kitchens. What was the company’s unadjusted cash balance on
November 30th before the bank reconciliation process was undertaken?
Dreammaker Kitchens The following information relates to the company’s November
bank reconciliation:
a. $10,700
b. $11,300
c. $12,200
d. $11,600
Capitalizing an expenditure rather than recording it as a revenue expenditure
a. impacts the total book value of plant assets reported on the balance sheet and the
amount of net income reported during a period.
b. impacts the total book value of plant assets on the balance sheet, but has no effect on
the amount of net income reported during an accounting period.
c. impacts the amount of net income reported during an accounting period, but has no
effect on the total book value of plant assets on the balance sheet.
d. has no impact on the book value of plant assets on the balance sheet or the amount of
income reported on the income statement.
Refer to the Ace Computing Company. The entry required to recognize the bad debts
expense for 2013 will act to
Ace Computing Company
On January 1, 2013, the Accounts Receivable and the Allowance for Doubtful Accounts
carried balances of $40,000 and $1,500 respectively. During the year, the company
reported $80,000 of credit sales. There were $500 of receivables written off as
uncollected in 2013. Cash collections of receivables amounted to $78,200. The
company estimates that it will be unable to collect 4% of the year-end accounts
receivable balanc
a. increase total assets and retained earnings.
b. decrease total assets and retained earnings.
c. decrease total assets and increase net income.
d. increase total assets and decrease net income.
Which of the following statements about current liabilities is true?
a. Current liabilities are listed in order of decreasing amounts in the current liability
section of a classified balance sheet.
b. The amount of current liabilities has little implication for a company’s liquidity.
c. Current liabilities are the denominator in the formula for the current ratio.
d. The current liabilities section of a classified balance sheet will never contain any
portion of long-term liabilities.
While preparing a bank reconciliation, which of the following items would be
subtracted from the balance per the company records?
a. outstanding checks
b. deposits in transit
c. bank service charges
d. interest earned on the bank account
Measurement of the economic effects on an entity involves each of the following
except
a. quantification of effects.
b. identification of the attribute to be measured.
c. selection of an appropriate unit of measure.
d. recording the economic effects in the financial statements.
On December 1, 2013, Anson’s Drug Store concluded that a customer’s $325 account
receivable was uncollected and that the account should be written off. What effect will
this write-off have on the company’s 2013 net income and balance sheet totals assuming
the direct write-off method is used to account for bad debts?
a. decrease in net income; decrease in total assets
b. increase in net income; no effect on total assets
c. no effect on net income; decrease in total assets
d. no effect on net income; no effect on total assets
Under the ____________________ Act, management of publicly-traded corporations
has increased responsibility for a system of internal controls that ensures reliability of
financial statements.
A company wants to minimize the amount of time and effort its bookkeepers spend on
calculating depreciation. Since the company has not been profitable, taxes are not an
issue, but maximizing the profit and minimizing reported losses are major objectives.
Recommend a course of action for this company and provide support for your
recommendation.
Refer to Cabana Club. Prepare all closing entries necessary based on the income
statement for the year ended December 31, 2014.
Cabana Club The company’s consolidated statement of income is provided below:
On a bank reconciliation, bank service charges for the month are added to the cash
balance per the company records.
Stock without a par value.
What is the revenue recognition principle?
If the investor holds enough common stock to control the investee (50% or more
common stock ownership), then the two corporations are no longer separate accounting
entities and therefore they no longer may maintain separate accounting records.
Refers to a situation where an error resulted in a misstatement of net income and the
correction requires a debit or credit to retained earnings.
